Between the lines: Fonterra must be super clean

By PHILIPPA STEVENSON

The term "dirty dairying" was coined to discredit the environmental record of dairy farming.

Thanks to "Powdergate", the industry risks the term being applied more widely.

If Fonterra doesn't want the mud to stick it cannot allow one person tainted by the scandal in its boardroom or on its staff.

To do so would forever compromise its image, let alone extinguish any hope of its being our flagship and national champion.

The company has said it is doing a thorough and aggressive investigation of the illegal export of dairy products worth millions of dollars. But there are worrying aspects to its handling of the matter.

Kiwi Dairies chairman Greg Gent has been economical with the truth.

He named South Pacific Distributors (SPD) as the New Zealand buyer and exporter of the product sold by Kiwi, but did not add that SPD was run by a director of Kiwi's Australian subsidiary Cottee Dairy Products. Or that Cottee bought the product from SPD.

He may have felt unable to name the staff member sacked over the matter but he did not even state which country he came from, effectively putting all Kiwi employees under suspicion.

He talked of 5000 tonnes of product being a tiny portion of the millions of tonnes produced.

It is by weight but not, as it turned out, by value. That one shipment could have been worth at least $39 million, and the profit from it $4 million.

Small beer in a billion-dollar industry, maybe, but not an insubstantial return to an individual or two.

And there is no telling at this point whether any ill-gotten gains accrued to Kiwi or to individual wrongdoers.

If the return was not a major boost to Kiwi's bottom line, why was it done? Given the risk they were taking, did the people who organised the shipment expect no cut?

Can it be assumed that a web of companies was set up at least as early as 1997 for a return once, or possibly twice?

Could the product have been stolen? Could this not be a simple bending of the outgoing Dairy Board export licensing regime and possibly major fraud?

None of these questions has an answer yet.

But this week a Fonterra spokesman was incredulous when asked if matters had been referred to the police or Serious Fraud Office. There seems little reason for incredulity.

There also seems little reason Fonterra chairman John Roadley could not speak in person about such serious matters.

An old habit which should die with the old-style industry is the one of trumpeting its successes and burying its corpses.

The country has just witnessed the flag-waving, band-playing razzmatazz of the industry's bid for exemption from Commerce Commission scrutiny and for special treatment by the Government.

In effect, we were told this was a good clean industry which was going to do us proud, make us proud.

Mr Roadley styled himself a statesman and stumped around the country giving speeches and pumping out media statements by the dozen about what a good corporate citizen Fonterra would be, and what an asset to New Zealand.

Naysayers were dismissed as at least naive about the needs of big international business, if not downright unpatriotic.

A fairweather statesman is no statesman at all and a corporate citizen has to do good, not just profess it.

Fonterra is facing its first test. It needs to pass with high marks to stand a chance of becoming a champion.